For E&Ps, Gas Hedges Offset Some Big Losses From Volatile Oil Prices

摘要

Fortuitous hedges made on multiyear gas prices are offsetting losses on crude oil hedges this year as small-cap Legacy Resources revs up its presence in the Permian Basin amid pipeline constraints on both commodities. Average spot gas prices at the benchmark Henry Hub hit $4.3 7 per million Btu in 2014 and companies like Legacy locked in prices for several years out. It was a saving grace for companies weighted toward gas when prices plummeted the following year, averaging $2.61/ MMBtu —^ the lowest annual average level since 1999 — and daily prices fell below $2/MMBtu, according to the US Energy Information Administration (EIA). Production and storage inventories hit record levels and fourth-quarter temperatures were much warmer than normal, slicing into demand.